Pop culture has long memorialized the Warner Brothers cartoon gag in which Wile E. Coyote, lured by his nemesis the Roadrunner, races off a cliff. Instead of immediately falling, Coyote keeps running, then looks down and realizes there’s nothing beneath him but empty space. His expression turns from anger to panic, whereupon he plummets. Coyote’s belated moment of realization is a trendy metaphor for our response to inevitable, though not yet fully realized, consequences of foolish behavior.

For the past couple of decades, we at Post Carbon Institute have been pointing out that energy is the basis of the economy, that oil is our foremost energy source, and that a transition to alternative energy sources will necessarily be slow and incomplete. Given that oil is a depleting, polluting, non-renewable resource, industrial society is due for a reckoning at some point. We are all in an extended Wile E. Coyote moment.

But now, as the United States’ war on Iran has set off a global energy crisis, humanity has arrived at a more immediate and critical Coyote moment. The International Monetary Fund (IMF) has issued a report suggesting that continued oil shortages could reduce global economic growth by 2% and raise inflation by 2.3%. Some analysts say the IMF warning is far too weak and that the crisis could trigger a global recession or worse.

Oil is a key ingredient in most consumer products and their packaging; expensive oil therefore translates to price hikes for toys, car parts, electronics, clothing, and more. It powers or is a critical input into essential elements of industrial society, including the food system. And oil moves everything: Global supply chains depend on transportation by truck, rail, ship, and air, and over 90% of transport energy is oil based. That means an extended crisis would likely lead to stagflation, in which the economy is hobbled simultaneously by inflation and slow growth or economic contraction. When prices for food and medicines are eventually impacted, no one will remain unaffected.

America’s status as oil-production king and its cushion of reserves have indeed helped it weather the early stages of the crisis. But the nation won’t be insulated from serious economic damage for long.

However, for the moment, the stock market is hardly signaling imminent economic peril; instead, the Dow Jones is near peak levels. Further, the US, which started the war, seems somewhat spared from its consequences, when compared with many other countries. And oil prices, while higher than before the hostilities, are nowhere near inflation-adjusted historic peaks.

What’s keeping Coyote airborne?

American Oil Un-Exceptionalism

Myanmar, Bangladesh, Slovenia, Sri Lanka, Cambodia, and Vietnam are rationing or restricting the purchasing of fuel. Germany’s Lufthansa airline has cut 20,000 summer flights due to rising fuel costs. The examples could be multiplied: Countries in Asia, Europe, and Africa are already experiencing symptoms of energy scarcity, while Australia faces dire impacts to its agriculture.

But in America, the worst fallout so far is expensive gasoline. Before the first attacks on Tehran in late February, the average price of gas in the US was $2.98 a gallon. It’s now above $4—a political worry for the president and other Republicans, but a price that’s not quite as high as ones motorists faced in the 1970s. US airlines have raised their checked baggage fees in response to higher fuel costs. Yet, otherwise, business hums along more or less as usual. Why have Americans seen so few repercussions?

Two reasons are widely cited. The first is that the US is currently the world’s biggest oil producer and is therefore far less vulnerable to shortages than nations that import most, or all, of their fuel. The second is that the US has the world’s second-largest strategic petroleum reserve (after China), which, in an emergency, can be brought to market to lower prices and avert scarcity.

However, these two pillars of US energy resilience are shaky. First: Even though the United States produces over 13 million barrels of oil per day, it uses almost 20 million barrels. Further, the kinds of oil extracted from American wells are not always the kinds that the nation’s refineries are set up to use. So, oil companies export light crude and import heavier crude to produce the blends of gasoline, diesel, and jet fuel that the US market demands. The result: America is the world’s second-largest oil importer, even though its politicians love to brag about “energy independence.”

Second: Strategic petroleum reserves are only meant to last a relatively brief time. Currently, the US has about 400 million barrels of oil stored in four underground salt caverns along the Gulf of Mexico. That’s 20 days’ worth of total American consumption at current rates. Therefore, the government has limited ability to influence oil prices during a months-long supply crunch.

America’s status as oil-production king and its cushion of reserves have indeed helped it weather the early stages of the crisis. But the nation won’t be insulated from serious economic damage for long.

Oil has been trading at roughly $100 a barrel since the start of hostilities, a price somewhat lower than ones seen in June and July 2022 when Russia invaded Ukraine. The closure of the Strait of Hormuz would intuitively seem a much graver threat to world oil supplies. Given that a fifth of the world’s petroleum flow is now unavailable, why haven’t prices shot even higher?

WTI Crude Oil Prices are shown from 2021-2026. (Graphic via Trading Economics)

One factor is the so-called TACO trade. US President Donald Trump has repeatedly shown the tendency to make threats and then back away; hence the meme “Trump Always Chickens Out” (TACO). The term “TACO trade” gained currency during 2025, when the president announced steep tariffs, then canceled or moderated them, ostensibly to leave time for negotiations but also perhaps in response to negative impacts those announcements had on stock prices (stock market activity appears to influence Donald Trump’s behavior more than most other factors). Savvy stock traders learned that if, instead of taking Trump’s most belligerent........

© Common Dreams